PenCom channels N5.51 trn pension assets into real sector development

Joy Agwunobi

The National Pension Commission (PenCom) has disclosed that a significant portion of Nigeria’s pension assets amounting to N5.51 trillion—has been invested in long-term financial instruments targeted at stimulating growth in the country’s real sector.

This investment strategy is seen as a deliberate move to align pension funds with national development priorities, particularly in sectors with the capacity to drive sustained economic expansion.

According to the Commission, these funds have been allocated across several critical asset classes including infrastructure projects, real estate ventures, private equity schemes, and subnational infrastructure initiatives. These investment channels are believed to play a crucial role in creating jobs, bridging infrastructural gaps, and fostering financial inclusion across Nigeria.

This was revealed by   Omolola Oloworaran, director general of PenCom, during a strategic meeting with a delegation from the International Monetary Fund (IMF). The meeting was part of the IMF’s 2025 Article IV Consultations, which included interactions with key players in Nigeria’s financial ecosystem.

Leading the IMF delegation was Jose De Luna, a senior financial sector expert, who engaged with PenCom officials on the Commission’s ongoing investment strategies and broader developments in the financial sector.

During the discussions, Oloworaran highlighted that the pension industry’s contributions go beyond retirement security, extending into critical economic sectors that require long-term capital to thrive.

She noted that the Net Asset Value (NAV) of Nigeria’s pension industry has seen a notable increase of 22.65 percent  within a year—from N18.36 trillion in December 2023 to N22.51 trillion by the end of 2024.

This growth, she explained, was primarily driven by steady pension contributions and robust investment income.

However, despite the positive momentum, Oloworaran pointed out a lingering challenge: the limited pool of investable instruments that meet regulatory requirements for pension funds.

She said that out of all potential investment options, only 86 instruments currently qualify under PenCom’s stringent criteria, namely liquidity, minimum quality standards, and adequate free float—highlighting a need for more eligible options in the capital market.

She further explained that although PenCom’s Investment Regulation provides for the diversification of assets, the scarcity of qualifying instruments constrains the Commission’s ability to diversify and deepen its investment portfolios.

To address this gap, she announced that PenCom is strengthening partnerships with key stakeholders in the financial ecosystem, including the Securities and Exchange Commission (SEC), the Debt Management Office (DMO), and the Pension Fund Operators Association of Nigeria (PenOp).

These collaborations, she said, are aimed at expanding the investable universe for pension assets and encouraging the creation of innovative financial instruments that align with long-term economic objectives.

“Our focus remains on enhancing the quality and diversity of investment portfolios under the Contributory Pension Scheme (CPS), while ensuring the long-term sustainability of pension assets. We are also strategically reviewing our investment frameworks to address issues around asset quality, economic impact, and regulatory limitations,” Oloworaran stated.

She further emphasised PenCom’s commitment to supporting alternative asset classes that are secure and offer competitive returns. Among the options being explored are green bonds, infrastructure funds, and venture capital vehicles—all of which have the potential to support sustainable development goals and enhance Nigeria’s investment climate.

In response, the IMF delegation expressed satisfaction with PenCom’s strategic direction and its emphasis on responsible, long-term investment practices. Speaking on behalf of the team, Jose De Luna commended the Commission’s proactive role in strengthening Nigeria’s financial markets through well-regulated pension fund deployment.

He noted that PenCom’s approach could serve as a model for deepening capital markets across emerging economies, especially as countries seek innovative financing mechanisms for infrastructure and economic development.